Planning for retirement is rarely easy. But for people who are their own bosses, the complexities are multiplied.

After all, self-employed workers—a fast-growing segment of the workforce that includes everyone from gig workers who book their work online to freelancers to small-business owners—often have volatile incomes. That makes it hard for them to save consistently and even harder to predict how much they will have by retirement.

The self-employed aren’t doing particularly well at retirement planning. According to a recent survey of 1,600 self-employed people in 15 countries by the Transamerica Center for Retirement Studies and the Aegon Center for Longevity and Retirement, only 36% in the U.S. say they make sure to save regularly for retirement—compared with 54% who work for others.

But they have many options to get their savings on track. The right approach will depend on factors including the amount self-employed people want to save and how much complexity they can tolerate when establishing and maintaining a retirement plan.

The best way for most people to start is with an IRA, says Ed Slott, a Rockville Centre, N.Y., consultant who provides training to advisers on the retirement-savings vehicle.

IRAs come in two forms. With a traditional IRA, investors generally receive upfront tax deductions for their contributions and pay income tax on their withdrawals. With a Roth IRA, they receive no deductions for their contributions, but can avoid tax on their withdrawals.

Roth IRA contributions are off-limits to individuals with modified adjusted gross incomes above $133,000 in 2017 and married couples with annual adjusted gross incomes above $196,000.

But for new business owners who qualify, the Roth is often the better option, says Mr. Slott. The reason: Business owners in startup mode “are often in a lower bracket than they will be in the future,” he says. As a result, he adds, they’re likely to come out ahead by forgoing a deduction to receive tax-free withdrawals later.

Another advantage of the Roth: Account owners can withdraw their contributions tax- and penalty-free, although their earnings may be subject to income tax and a 10% penalty. With a regular IRA, in contrast, account owners must pay income tax on their withdrawals and those younger than 59½ years old generally owe a 10% penalty, too.

The downside to both traditional and Roth IRAs is that you can only contribute a total of $5,500 a year—a limit that applies to all of your IRAs combined and rises to $6,500 for those age 50 or older.

The self-employed who want to save more per year can open a second type of retirement account that allows for savings of as much as $54,000 a year in 2017.

The most popular choices are the SEP IRA, and the Simple IRA. Many brokerage firms and banks offer these plans, which come with the same wide array of investment choices available in regular IRAs.

The self-employed can contribute to both an IRA and one of these accounts. But single people with modified adjusted gross incomes above $72,000 and married couples who file jointly and earn more than $119,000 who use both lose the ability to make tax-deductible contributions to a traditional IRA. (They can instead make nondeductible contributions, but that means they’ll be taxed going in and on the appreciation on that money when they take withdrawals.)

The simplest of the options is the SEP. It has little to no administrative costs or annual filing requirements and the initial paperwork takes about 10 minutes, says Denise Appleby of Appleby Retirement Consulting Inc. in Grayson, Ga.

Because the annual contribution limits on the SEP and Simple IRA vary depending on a person’s income, it’s important to calculate the amount you can save with each.

Both the SEP IRA allows you to save as much as 25% of your compensation in a traditional account that provides an upfront tax deduction but requires you to pay income tax on your withdrawals.

The SEP IRA caps annual savings at $54,000.

With a Simple IRA, you can save as much as $12,500 a year pretax—or $15,500 for those who are 50 or older—plus make a matching contribution of up to 3% of pay.

Whichever you choose, be sure to automate your contributions to help ensure you fulfill your savings goals, says Catherine Collinson, president of the Transamerica Center for Retirement Studies. And when times are good, save as much as you can to compensate for leaner years.

Source: Anne Tergeson, Wall Street Journal